1. Consider the simple von-Thunen model of agricultural land use developed in class. This question asks you to analyze the land use of cotton farmers who use a fixed proportion production technology. Assume the following:

-- cotton yield (E) is 800 pounds per acre

-- cotton sells at $1 per pound (P) at the market

-- non-land input costs (I) are $80 per acre

-- transport cost (t) is $0.10 per pound per mile

-- farmers pay the transport cost of moving carrots d miles to the market

1.  Derive the bid-rent curve per acre of land for cotton farmers by imposing the appropriate long-run equilibrium condition. Explain the condition. Show all steps.
2. Plot the bid-rent curve for cotton farmers. Then write an expression to determine the land area where cotton is grown (no need to evaluate the expression).
3. How much will the landlord charge to rent 1 acre at the city, that is at d = 0. ? at d = 100 miles? Show computations and explain your answer.
4.  Suppose transport costs rise to $0.20 per pound per mile. How much will the landlord charge to rent 1 acre at the city? Does the landlord receive any benefits from the change in transport cost? Do the farmers? Explain

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